Potential Cannabis Regulations

WHAT'S NEW

GENERAL SUMMARY

The Redwood City, City Council approved a phased approach to cannabis regulations and while there was agreement with much of the phases and next steps, as City staff works to develop the regulations of each phase, all phases will return to the City Council for further discussion and approval. A timeline on the phased approach will be developed and presented to the City Council in early 2018. Phase 1 and 2 will continue to allow medicinal cannabis delivery. Phase 3 potentially would allow cannabis delivery from non-storefront retail delivery facilities located within the City. Phase 4 potentially would allow storefront retail facilities located within the City.

The phased approach includes:

Phase 1: On November 13, 2017, the City adopted a Zoning Code amendment which bans commercial cultivation, manufacturing, testing, retail, and distribution, except for deliveries of medicinal and adult use cannabis. The Zoning Code amendment goes into effect on December 13, 2017 and includes allowing cannabis sales via delivery as of January 2018, limiting indoor cultivation to six cannabis plants for personal consumption, banning outdoor cultivation, and banning all commercial activity, except for deliveries.

Phase 2: Notify delivery operators who may be delivering that they need to obtain a business license and pay the business license tax. Develop a cannabis regulatory fee to offset staff costs involved with licensing, regulating, and enforcing cannabis activity and regulations associated with deliveries. City staff would return to the Council for approval of the proposed fee and regulations.

UPCOMING COUNCIL MEETINGS AND DIRECTION

PREVIOUS COUNCIL MEETINGS AND DIRECTION

November 13, 2017 Council Meeting Update

At this City Council meeting, the City Council approved an ordinance regarding cannabis cultivation and commercial cannabis activity, based on their discussion at their meeting on October 23. The ordinance goes into effect on December 13, 2017.

At their October 23 City Council meeting, the City Council discussed a phased approach to cannabis regulations to:

Use regulations to enable safe adult access to cannabis as voters requested/survey responses support; work with schools and youth-serving organizations to deter youth access

Recover all costs of regulation

Adapt as market evolves and public health data becomes available

Engage educational and health agencies, business community, residents

Enable cannabis business to become part of business community, including applying business license tax and seeking voter approval for a cannabis tax to support City services

Determine whether any local regulations are needed on top of adopted State regulations

Following research and analysis and an assessment of best practices, by regulating cannabis sales, the City can provide an incentive for responsible business operators to locate in Redwood City and thereby reduce black market activity.

At the October 23 meeting, the City Council held a public hearing and under consideration was a phased approach to allow cannabis sales via delivery as of January 2018 and retail cannabis storefronts later. Council approved an ordinance limiting indoor cultivation to six cannabis plants for personal consumption, banning outdoor cultivation, and banning all commercial activity, except for deliveries.

Other Details Regarding the Phased Approach

The City Council discussed the recommended phased approach and while there was agreement with much of the phases and next steps, as City staff works to develop the regulations of each phase, all phases will return to the City Council for further discussion and approval. A timeline on the phased approach will be developed and presented to the City Council in early 2018.

The City Council also directed City staff to complete additional research, including learning about the development agreement approach used in Hollister to capture cannabis sales tax earlier and evaluate allowing cannabis research and development in one of the earlier phases. The City Council also encouraged current delivery businesses to gain a City business license now and not wait until phase 2.

The phased approached includes:

Phase 1: Adopt proposed Zoning Code amendment to which bans outdoor and commercial cultivation, manufacturing, testing, retail, and distribution, but continue to allow medical cannabis deliveries. Medical and adult use deliveries will be allowed on January 1.

Phase 2: Notify delivery operators who may be delivering that they need obtain a business license and pay the business license tax. Develop a cannabis regulatory fee to offset staff costs involved with licensing, regulating, and enforcing cannabis activity and regulations associated with deliveries. We would return to the Council for approval of the proposed fee and regulations.

Phase 3: Implement regulations to allow cannabis delivery from warehouses or distribution facilities located in the City.

Planning Commission approved amendments to the zoning ordinance to prohibit cannabis distribution facilities in all zoning districts for the short-term to ensure enough time for staff to return with subsequent actions to potentially allow cannabis sales in the near future. They also approved an ordinance for City Council consideration limiting indoor cultivation to six cannabis plants for personal consumption, banning outdoor cultivation, and banning all commercial activity, except for deliveries.

Also as a result of City Council input, the Council approved the first reading of an ordinance at their October 2 meeting to ban smoking in multi-family residences of two units or more. The ordinance includes a ban on smoking, vaping or otherwise igniting tobacco, cannabis, and/or illegal drugs.

BACKGROUND

In response to new State law allowing the recreational use of cannabis, the City of Redwood City is currently in the process of evaluating City regulations regarding the cultivation, storage, distribution, delivery, sale, taxation and smoking of recreational and medical cannabis. Presently, Redwood City’s only regulation addressing cannabis-related activity is to prohibit medical cannabis distribution facilities in all zoning districts of the City. Delivery of medical cannabis is allowed and is not subject to City business license obligations or any City taxes. If the City does not take some action, under State law, beginning January 1, 2018, the sale, cultivation, processing/manufacturing, storage, distribution, and delivery of recreational cannabis would be legal within the City limits. In June, the City Council met to discuss different regulatory options available to the City. The City Council meeting staff report is available here. Go here to view the City Council meeting discussion.

Historical Dates for California Marijuana/Cannabis Laws

In 1996, the voters of the State of California approved Proposition 215 (the “Compassionate Use Act” or “CUA”).

On January 1, 2004, the California Legislature enacted the "Medical Marijuana Program Act" or “MMPA,” to clarify the scope of the Compassionate Use Act, to establish a voluntary program for identification cards issued by counties for qualified patients and primary caregivers, and to provide criminal immunity to qualified patients and primary caregivers for certain activities involving medical marijuana, including the collective or cooperative cultivation of medical marijuana.

On October 9, 2015, Assembly Bills 243 and 266 and Senate Bill 643 (collectively, the “Medical Marijuana Regulation and Safety Act” or “MMRSA”) were enacted to create a state regulatory and licensing system governing the cultivation, testing, and distribution of medical marijuana, the manufacturing of medical marijuana products, and physician recommendations for medical marijuana.

On June 27, 2016 Senate Bill 837 was enacted, which included a number of technical changes to the MMRSA, including renaming the act to the Medical Cannabis Regulation and Safety Act (the “MCRSA”).

On November 8, 2016, the voters of the State of California approved Proposition 64, known as the “Control, Regulate and Tax Adult Use of Marijuana Act” (the “AUMA”), under which a variety of non-medical marijuana businesses can operate subject to local ordinances and adults 21 years of age or older may grow, possess and use limited amounts non-medical marijuana.

On June 27, 2017, the Governor signed Senate Bill 94, which repealed MCRSA, incorporated certain provisions of the MCRSA into the licensing provisions of the AUMA, and consolidated the regulatory and licensing framework for medical and adult use cannabis, with the consolidated provisions known as “Medicinal and Adult-Use Cannabis Regulation and Safety Act” (MAUCRSA).

The CUA, MMPA, and MAUCRSA are collectively known as the “State Marijuana Laws”.